A Mortgage Broker Defined
A Mortgage Broker is a real estate financing professional who, as their business, puts together a lender and a borrower. This is done after thoroughly reviewing the needs and capabilities of that borrower, the characteristics of the subject property and the various lending programs available from a wide range of lenders. This is done in compliance with and under the restrictions of all state and federal laws.
A Mortgage Broker's Benefit to the Public
The loan program, which best suits a particular borrower, is not always evident when that borrower makes a loan application. Often a loan program, which at first looks as if it is a good match, may not be practical as the loan is processed and additional information about the borrower and/or property is received. Lender loan programs and the rates inherent in each program often change on a daily basis. Using a Mortgage Broker allows the consumer the opportunity to go to a different lender if the original program, or its rates and/or fees have changed, or if the circumstances of the property borrower warrant changing. A Mortgage Broker represents their client by accessing a multitude of lenders. The Mortgage Broker may, therefore, offer their client greater flexibility through more varied programs than those which are offered through a single bank.
In Summary
The Mortgage Broker Industry has enjoyed remarkable evolution and growth in our state. As Mortgage Brokers, and as an association, we seek to do just one job and to do it well. We provide an outstanding service to the clients we serve, to our communities and to the lending/banking industry.
Finding a mortgage loan for your home can be confusing experience. With so many options to choose from, it can be difficult to find your way. That is why a Mortgage Broker is your number one source for a loan. A Mortgage Broker will guide you through the lending process, provide you with any help you need, and try to simplify the process. You will get the service and selection you want from a Mortgage Broker.
Over 60% of Americans do. Brokers provide the consumers with:
The consumer receives an expert mentor through the complex mortgage lending process. The Mortgage Broker offers the consumer extensive choices and access to affordable home loans while balancing the consumer's financial interests and goals.
Your Mortgage Broker:
The key to your new home or debt consolidation
Because using a Mortgage Broker can make a difference in the interest you pay, the points you are assessed, how difficult it is for you to qualify for a loan, the length of time it takes for your loan approval, and even whether or not you can get a loan.
If you had to do it yourself, where would you start? How many mortgage sources are you familiar with? How many of the hundreds of loan variations do you fully understand? Your mortgage broker can guide you through this potentially disastrous maze, and lead you to a lender and the loan that best fits your specific requirements.
(Too often, it is the other way around … you are minutely scrutinized by the lender to see if you fit their profile.)
There are, in fact, money sources (wholesale lenders, unconventional investors, etc.) who may only provide funding through Mortgage Brokers. Market conditions often dictate how “choosey” most lenders will be, what percentage of total income the lender will allow a mortgage to be, how large a down payment is required, how perfect your credit rating must be, and other such factors. Unconventional sources known only to a Mortgage Broker may offer hope to prospective homeowners who are having difficulty qualifying with conventional lenders.
Finding a mortgage loan for your home can be a confusing experience. With so many options to choose from, it can be difficult to find your way. That is why a Mortgage Broker is your number one source for a loan. A Mortgage Broker will guide you through the lending process, provide you with any help you need, and try to simplify the process. You will get the service and selection you want from a Mortgage Broker at Grandview Lending.
Have more Americans been able to buy homes because of Mortgage Brokers?
Yes! Mortgage Brokers have pioneered the subprime credit market, using innovative loan packages to allow low- to moderate-income borrowers, with less than perfect credit histories, to start enjoying the benefits of homeownership. Many low-income borrowers with less than perfect credit histories would not have been able to purchase their dream home without the assistance and dedication of a Mortgage Broker.
Are Mortgage Brokers lenders or bankers?
Neither. A Mortgage Broker is a real estate financing professional acting as an independent contractor. The range of products and services offered through Mortgage Brokers, and by Mortgage Brokers, is evolving rapidly. There are circumstances when Mortgage Brokers may act as bankers, funding their loans. However, the majority perform origination services up to the point of funding.
Does the Mortgage Broker really care about the quality of the loan itself?
Yes, absolutely. The safety and soundness of the mortgage lending community is directly linked to the success and integrity of its home loan originations. Furthermore, Mortgage Brokers represent the single largest residential origination source today, emphasizing that they play a significant role in the mortgage loan process. These numbers highlight the fact that consumers, who exercise their choice and choose Mortgage Brokers, most likely do so, because Mortgage Brokers are dedicated to their customers: consumers, wholesale lenders, and ultimately, American taxpayers.
Should Mortgagte Brokers be regulated?
Mortgage Brokers are regulated by several federal laws and regulations, and by dozens of state laws and licensing boards. The National Association of Mortgage Brokers (NAMB) supports reasonable and fair state and federal regulation of Mortgage Brokers and lenders. The industry is regulated by 17 federal laws and numerous state and federal regulations.
What role does the Mortgage Broker play versus the wholesale lender?
The wholesale lender underwrites and funds the home loan, may service the loan payments, and ensure the loans' compliance with underwriting guidelines. The Mortgage Broker, on the other hand, originates the loan. A detailed application process, financial and credit worthiness investigation, and extensive disclosure requirements must be completed in order for a wholesale lender to evaluate a consumer's home loan request. The Mortgage Broker simplifies this process for the borrower and the wholesale lender, by conducting this research, counseling consumers on their loan package choices, and enabling them to select the right loan for their home-buying needs.
The mortgage loan process can be arduous, costly, and seemingly impossible to the consumer. The Mortgage Broker works as the liaison between the borrower and the lender to create a cost-effective and efficient loan process.
Do Mortgage Brokers work for the wholesale lender or the consumer?
Neither.
As an independent contractor, the Mortgage Broker allows wholesaler lenders to cut origination costs by providing such services as preparing the borrower's loan package, loan application, funding process, and counseling the borrower. Mortgage Brokers help keep loan rates low due to their minimal overhead and setup costs. Furthermore, the Mortgage Broker will seek the loan which best suits the borrower's financial circumstances, needs and goals. From the consumer perspective, with rare exception, the Mortgage Broker does not get paid unless and until the loan closes. Thus, the Mortgage Broker has the ultimate incentive to provide the best possible customer service to the consumer.
Isn't the Mortgage Broker supposed to get the best deal for the consumer?
Since Mortgage Brokers offer the products of many wholesale lenders, they often can offer consumers a wider selection of loan products. This question presumes that anyone can know what is "the best deal." While many would consider "the best deal" to mean "the lowest rate," a loan program with a very low interest rate may not be the best choice for a consumer with limited cash, if that rate comes with high points and fees. A 15-year loan may save a borrower tens of thousands of dollars in interest payments of a 30-year loan, but the higher monthly payments may be acceptable to the consumer. So, "the best deal" for any consumer depends on his/her financial circumstances, needs and goals.
Today, over two-thirds of the nation's mortgages are originated by Mortgage Brokers. This clearly indicates that consumers are choosing the superior options, service, and expertise offered by Mortgage Brokers. Mortgage Brokers have forced retail lenders to compete with other loan sources driving down costs nationwide.
Don't Mortgage Brokers "steer" consumers to the wholesale lender who pays the highest fees to the Mortgage Broker?
While isolated instances of adverse steering can occur, the Mortgage Brokerage industry has predominantly armed consumers with a free-market economy weapon: open and vigorous competition. Any consumer exercising his or her basic right to shop and compare, will ultimately find the loan options that are in his/her best interests. The combination of government-mandated disclosures and vigorous competition has presented today's consumer with unprecedented levels of choice. While price is an important consideration in advocating a specific wholesale lender, Mortgage Brokers also make their professional recommendations based on a number of other factors which include the lender's underwriting criteria ability to fund a loan on time and in compliance with the consumer's requirements.
Why do Mortgage Brokers collect fees from both the consumer and the lender? Isn't this a conflict of interest or a duplication of charges prohibited by the Real Estate Settlement Procedures Act?
The Real Estate Settlement Procedures Act allows fees to be charged between settlement service providers, as long as those fees are reasonable for services, goods, or facilities actually provided. Mortgage Brokers provide the same services to consumers as do retail loan offices that typically charge the consumer an origination fee. These services include: taking the application, obtaining the credit report and appraisal, counseling the consumer on the loan process, and collecting the necessary documents. Mortgage Brokers also provide separate and distinct services and facilities to wholesale lenders. These include: marketing the lender's products, and assembling and delivering the completed loan package.
In addition, lenders may pay Mortgage Brokers a premium – “yield spread premium" or "service release premium" – which may include compensation for the services and facilities, but also represents payment for the intrinsic market value of the closed loan. All of these are legal compensation. It is important to remember that regardless of which party compensates the Mortgage Broker (the lender or the consumer), in almost all cases the Mortgage Broker receives nothing until the loan closes.
The members of the Indiana Association of Mortgage Brokers, believing that the interests of the public and private sectors are best served through the observance of ethical standards of practice, hereby subscribe to the following Code of Ethics.
HONESTY AND INTEGRITY
INAMB members shall conduct business in a manner reflecting honesty, honor and integrity.
PROFESSIONAL CONDUCT
INAMB members shall conduct their business activities in a professional manner.
HONESTY IN ADVERTISING
INAMB members shall endeavor to be accurate in all advertisements and solicitations.
CONFIDENTIALITY
INAMB members shall avoid unauthorized disclosure of confidential information.
COMPLIANCE WITH THE LAW
INAMB members shall conduct their business in compliance with all applicable laws and regulations.
DISCLOSURE OF FINANCIAL INTERESTS
INAMB members shall disclose any equity or financial interest they may have in the collateral being offered to secure the loan.
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